The S&P 500 found short-term support at 1370 after penetrating the rising trendline on a weekly chart. Loss of momentum warns that a top is forming. Reversal of 63-day Twiggs Momentum below zero would strengthen the signal. Breach of support would test the primary level at 1270.
Note how the S&P 500 lately moves in increments of fifty: 1270, 1320, 1370, 1420, 1470…….
The Nasdaq 100 similarly penetrated its rising trendline — shown here on a monthly chart — warning that a top is forming. 63-Day Twiggs Momentum (not shown) is below zero, strengthening the signal. Breach of primary support at 2450 would confirm the primary down-trend signaled by bearish divergence on 13-week Twiggs Money Flow. Respect of primary support is unlikely, but would indicate another advance.
* Target calculation: 2400 – ( 2800 – 2400 ) = 2000
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
I don’t believe drawing a support line from 10/04/11 to 6/04/12 on the S&P 500 would be an accurate support level for the correction we’re currently in. The correction from May to October 2011 was a large/major correction compared to the smaller/minor corrections of April to June, and September 14 to current of this year. This makes the support line to steep.
I always enjoy reading your views of the markets. Thanks
Thanks for your views. I use horizontal lines to reflect support and trendlines to gauge momentum. According to the trendline and the indicator, momentum is falling, warning of a top. A correction to 1270 would reinforce this.